Sections

Progressive Conservatives are right about Ontario’s spiralling debt

But Tim Hudak's plan has complicating factors

Ontario Liberal Leader Kathleen Wynne speaks in front of carpenter apprentices and other Liberal candidates during a campaign stop Monday at the Carpenters' Union Local 27 Training Centre in Vaughan, Ont. Her government more than doubled the provincial debt — from $130 billion to $270 billion — in 11 years, Michael Den Tandt writes.Photo: Darren Calabrese/THE CANADIAN PRESS

Here’s the thing about debt: It must be repaid. It can be forgiven or written off but that just means someone different pays the tab. It can be ignored, dismissed, cast out of sight and out of mind, but only temporarily. Ultimately both Kathleen Wynne’s Liberals and Andrea Horwath’s New Democrats, should either form the next Ontario government, will run into the very same bond-market-driven brick wall that a former provincial premier, Bob Rae, faced in 1993-94. Their lavish spending promises in the current campaign are therefore both reckless and dishonest.

The complicating factor is that the Progressive Conservative leader, Tim Hudak, turns out to be not particularly likable, or persuasive. And he has a habit of lurching to the ideological fringe. Like his mentor, Mike Harris, Hudak is not much of a “progressive” conservative at all. Hence, the strange malaise of this campaign, in which no option seems ideal. The centre, where Ontarians historically are most comfortable, has been liquid-papered out of the equation.

There is no denying the province’s economy is a shambles. That’s mostly because former premier Dalton McGuinty had a habit of buying his way out of complex problems with huge expenditures of public money. The gas-plant scandal was only the flashiest example. The Green Energy Act, as Parker Gallant has reported in the Financial Post, dwarfs the gas plants by many orders of magnitude, in terms of dollars squandered. McGuinty spent his way out of difficulties with public-service unions; out of Caledonia, while betraying the people who lived there; out of a fiscal hole, in 2003, after violating a written promise to run balanced budgets and hold the line on taxes.

The ensuing mess was chronicled in exhaustive detail in 2012 by economist Don Drummond. Simply put, Drummond reported that Ontario was suffering from a combination of a strong Canadian dollar, lagging exports and spending that had risen much faster than lacklustre growth could support. When the Liberals took office in 2003, the province’s net debt was just over $130 billion. By the fall of 2011 it was pushing $240 billion, and climbing fast. It now stands at about $270 billion, with $10 billion a year going to interest payments. This is the environment in which Wynne proposes high-speed rail between Toronto, Kitchener, London and Pearson airport, because bullet trains are so cool, and Andrea Horwath tosses $100 million at childcare workers on a single campaign day.

Wynne and Horwath both project a return to balanced budgets by 2017-18. What neither says is that, in order to meet that target, they’d have to impose deep cuts of their own: Interest rates are at a cyclical low, and projected to rise in the coming years. As economist Jack Mintz has pointed out, each percentage point increase in rates will add an extra $3 billion annually in interest payments. What’s far more likely than a return to balance, therefore, is that the Liberals and NDP blow their targets, until they’re forced by global markets to do otherwise. Ontario’s net debt-to-GDP ratio is approaching 40 per cent. That’s better than Greece, where the ratio hit 173 per cent at the end of 2013, but much worse than noted basket case California, and by a wide margin, the Fraser Institute pointed out in March.

Why not propose something more palatable to the mainstream to begin with?

All of which gets us to Hudak, and his “million jobs” plan, his pledge to slash 100,000 public-sector jobs, cut corporate tax rates from the current 11.5 per cent to eight per cent, and lay waste to the “big union bosses” he claims are pulling the strings at Queen’s Park. There’s no arguing with the numbers that describe Ontario’s looming fiscal crisis. But Hudak has hurt his case considerably by tossing out projections that are attention-getters at best, misleading at worst. The million jobs, it turns out, are actually 500,000 jobs, according to the Tory campaign’s own numbers, released Tuesday. It expects the remaining 500,000 jobs to accrue regardless. And even that’s no better than an elaborate guess, dressed up with charts.

As for the 100,000 job cuts, even the Globe and Mail — that noted Trotskyite rag — dislikes the idea, not because its general thrust is wrong, but because it may be too much, too fast. With doctors, nurses and cops declared immune to downsizing, the Globe pointed out in an editorial, there are only 650,000 Ontario public servants left, many of them teachers. So Hudak is proposing to fire 15 per cent of them — within two years. Really? Far more likely is that, given the reality of deep, painful service cuts and social upheaval on par with that of the Mike Harris years, he’ll be forced to go more slowly than promised, or be held to a single term, assuming he were to win a majority. So, the brain-tickler: Why not propose something more palatable to the mainstream to begin with?

Hudak and the Conservatives are the natural beneficiaries of the Liberals’ decade of profligacy, and the desire for both change and common-sense economic management. If only they were trying, just a little bit harder, to persuade people who aren’t already on their side.

I am a national political columnist for Postmedia News. My work appears in the National Post, on Canada.com, the Ottawa Citizen, Montreal Gazette, Calgary Herald, Edmonton Journal, Halifax Chronicle-Herald... read more and Vancouver Sun, among other publications. I write primarily about national politics and policy.View author's profile